Raghuram Rajan, newly appointed governor of Reserve Bank of India (RBI), listens to a question during a news conference
The Reserve Bank of India will lower its marginal standing facility (MSF) rate by more than any hike it makes in the policy repo rate in order to reduce the gap between them to 100 basis points, RBI Governor Raghuram Rajan said on Friday.
The policy repo rate was hiked by 25 basis points to 7.50 percent, while the marginal standing facility rate, for emergency funds, was reduced by 75 basis points to 9.5 percent at the RBI policy review on Friday.
Asked at a post-policy news conference how the gap between the two rates would be narrowed further, Rajan replied: "I don't know but I can tell you one thing almost surely, the MSF will have to do most of the walking."
© Thomson Reuters 2013